NEW DELHI: BofA-ML in its latest report of 'Fallen Angels' released on Tuesday identified seven stocks that would appeal to the contrarian investor which are long term plays.

Broadly, the market has been flat over past 2 years. But most economy related plays have performed badly. Hence, our "Fallen Angels" have a pronounced biased towards rate sensitive, economy plays

The brokerage firm identifies 'Fallen Angels' as those stock which are under-valued as they are cheap relative to their trading history; secondly, they should have under-performed the market over past 2 years and lastly these stocks are under-owned in FII portfolio.

Jaiprakash Associates: BofA-ML thinks that the company's shares have substantial upside potential, as the company is set to monetize resources (coal, hydro and realty) to improve profitability as it peaks capex, generate FCF and reduce leverage.

The brokerage firms believe that over FY12-15E, JPA will sweat the assets it accumulated over the past decade to demonstrate its superior profitability - Karcham (RoE 23%), JP Infra (EBITDA Margin 55%) and cement (bottom-cycle in EBITDA/ton of Rs750/ton despite start-up losses)

Infosys: The IT major is regaining traction in the market after underperforming for a long time. This is reflected in the large and transformational deal wins at highest ever in past 6 quarters. It is also using acquisitions like Lodestone to expand offerings.

We see early signs of recovery in improved volume growth, uptick in large deal wins and acquisition of a strategic asset during Q2.

The stock is trading at 18 per cent discount to TCS at 13xFY14e PE, attractive given our forecast of narrowing revenue differential and EPS CAGR of 12% over FY12-15. Pick up in discretionary spend would provide upside.

DLF: Strong operational performance will drive stock price as the company accelerates new residential project launches. A trigger would be reduction in debt as the company sells non-core assets like Aman properties.

BofA-ML identifies stocks which are awaiting trigger for upside

State Bank of India: BofA-ML does not expect a sharp decline in SBI's slippages in the near-term. As asset quality shows signs of improvement, we could see material down shift in credit costs and rise in profitability.

Turnaround in asset quality may provide justification of its banks premium over other Govt. Banks. Current valuations are at a +20-25% discount to the 5- year average, which should normalize back, as worries on SBI diminish.

Reliance Industries Ltd: Better refining, petchem margins and positive newsflow in E&P like significant discovery along with higher than expected hike in KG D6 gas price are likely triggers for the stock to outperform the markets.

RIL's E&P has been de-rated since mid-2010 due to declining KG D6 gas production, sharp cut in KG D6 reserves and production guidance, said the brokerage report.

KG D6 gas price is due for revision in Apr'14 and BofA-ML feels that the prices may be hiked to US$8/mmbtu. A decision on KG D6 gas price is likely in FY14 for implementation from FY15, added the report.

BHEL: Govt is able to give coal linkages to Bhel JV with states and restore purchase preference will be a key positive for the stock. The government should be able to fix coal supply problems and start linkage window.

Adani Enterprises Ltd: The Company should reduce power losses due to tariff hike or cheaper coal for its PPAs with Maharashtra and Gujarat. The company should also improve corporate governance and honor inter-group contracts.

Adani Enterprises should also cut group capital expenditure, especially Australia mine capex to control leverage.